6 Simple Reasons Why Business Plans Do Not Receive Funding

Let’s face it: Many people don't even have a business plan written down and expect to get funded. *Sigh*

But not you. You have a plan ready to impress investors and get funded because you know a business with a business plan is 260% more likely to launch.

Yet there’s something that won’t let you get to the cha-ching moment!

What are you doing wrong?

Don’t pull out all your hair yet. There might be a very simple fix, a grammatical error somewhere in the business plan or a missing financial forecast no one picked up during review.

So let’s go over some of the common reasons why business plans do not receive funding.

Let’s begin.

Why business plans do not receive funding

Here are six broad reasons why you may not be getting the funding you deserve:

1. Financial fantasy land

Money talk should always be real. The moment an investor detects bluff, it’s game over for you. That’s why you can’t include unrealistic financial goals or forecasts.

Here’s everything you can include to avoid a fantasy financial plan:

• Detail every way the business will make money (product sales, subscriptions, licensing, etc.) and don’t forget to use market research or past data to back up expected growth.
• Make sure there are no hidden costs. Reveal fixed and variable as well as contingency fund which includes a small buffer for unexpected costs. (Investors love that you're prepared.)
• Include a cash flow statement, the balance sheet, and the break even point
• Cite market research, historical data, or case studies to explain why the numbers and predictions make sense.

The point of all this is to tell investors that you understand the profit potential of your company and how you will use the money they will offer—within a given amount of time.

2. Content faux pas

Even though content issues can be a major flaw, they’re easily fixable. Here are content issues you can’t afford if you want funding:

No risk analysis

A business will have risks. That’s just how it works. But to find funding, investors want to know if you’re aware of the risks and are willing to do something about it (or already have done).

So if you haven’t included a risk analysis in your business plan, get to it ASAP by explaining the different risks involved, such as:

• Market risks
• Technology risks
• Operational risks
• Management risks
• Legal risks

No marketing strategy

How do you intend to make sales or money? And how will you market yourself in this tough industry you’re setting foot into?

If you can’t explain in detail, you’re in trouble. That’s because no marketing strategy is like opening a store but hiding it in a basement—how will people find you?

Investors want to know you’ve thought through exactly how you’re going to reach your audience and eventually turn in profits. Why else would they trust you with their money if you can’t reach customers?

Unclear pain points

If you’re starting a business you need to be very clear about what kind of problem you're solving with your business idea. If you are, it must reflect in your business plan or investors will look the other way.

That's because, if you're not solving a problem or meeting some needs, why are you even in the business?

So make sure you explain the pain points properly so your investors don’t go Solving what problem again?” while going through your business plan.

Skipping competitive analysis

Skipping competitive analysis doesn’t make the competitor go away. In fact, it shows a lack of awareness of the market.

Investors want to see that a company knows its competitors, understands its competitive advantage, and has strategies to differentiate itself.

3. Writing and presentation errors

Imagine not getting funded because you missed an apostrophe.

Ouch!

Imagine not getting funded because your graph did not match the overall color scheme of the business plan.

Double ouch!

All these grammatical and visual errors can make or break your case.

Other writing and presentation issues for a business plan include:

• Too lengthy
• Unorganized
• Too technical
• Poor spellings

4. Playing to the wrong crowd

Trying to please all readers is a major mistake. That’s because all readers aren’t the right target for you.

Unless you narrow down your reader (whether an individual loan provider, bank, CEOs, angel investors, etc.), your intentions aren’t clear—defeating the purpose of obtaining money.

For example, since you want funding, you want to highlight your financial and growth plans rather than your internal operations which would be a better call for your company management team.

So identify your reader and cater your business plan to then or your efforts will forever go in vain.

5. Avoiding feedback

The business may be your brainchild, but stop flying solo and accept help from others in regards to reviewing your plan. And if you’ve already done so, consider the feedback.

You never know what a new set of eyes can find, started from a tiny typo to a large calculative error in a graph.

6. Bad business idea. It happens 🤷

If everything else in your business plan is by the book and you absolutely made sure to fix the above mistakes, then it’s probably time to go back to the drawing board and reevaluate your business idea.

Maybe it’s not as good enough. Or maybe there’s too many successful competitors saturating the industry.

So do your research and see if you need to improve on your existing idea or start with a new one altogether.

It’s time to revisit your plan

Business plans don’t get funded all the time. And as disheartening it may be, it’s often time something simple and fixable.

You just need to find what that issue or missing piece of puzzle is that is standing in your way. Use the above mistakes mentioned as your quick checklist to fix your existing business plan to start requesting for funds with more confidence.

But if you seem to be lost irrespective of the checklist, you can always hire business plan consultants to review or rewrite your business plan to drastically improve your chances of acquiring funding. With our expertise, we can help you with your business plan, while you focus on how to run the business.